ld have to almost triple its producing efforts to equal the consumption rate. Early last year, environmentalist and United States oil company executives found themselves sharing the same concern: low oil prices. As the year began, the average cost of crude oil continued to fall despite high demands during a cold winter, limited reserve capacity among members of OPEC and the continuing absence from the market of any oil from Iraq. In January, crude oil was selling at a five-year low of $12 a barrel. And OPEC, which once virtually dictated world oil prices by manipulating supplies, failed in two attempts to persuade its members to cut production by just 2 percent.Environmentalists were dismayed because cheap oil meant a continuing lack of economic incentives to develop or switch to alternative energy sources. Average regular gasoline prices at the pump fell in January to $1.06 per gallon, obliterating the effects of the small energy tax imposed by the federal government the previous October to encourage conservation.United States’ oil companies were unhappy with the low prices because 15 percent of the 6.6 million barrels per day they are capable of producing comes from wells that are very expense to operate. Oil executives estimated that they needed prices of about $18 per barrel to keep such wells profitable. By mid-year, oil prices had inched upward but still hovered below $17 per barrel – low enough to keep people “hooked on oil.” Despite the bargain-basement prices, many electric utilities continued to reduce their reliance on oil in order to comply better with the 1994 Federal Clean-Air Laws. Such utilities, along with certain other industries, are capable of switching fuels. But, last year, the companies tended to stick with natural gas, which burns cleaner, even when oil would have been cheaper. The main problem in the electric area of energy is that no one wants to use energy saving items until it is too...
